Oil, Gas, And Fracking News Reads: 08August 2021 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles for the week ending 07 August 2021. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening or Tuesday morning.

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Enbridge Sees Space for Fossil Fuel Infrastructure in Energy Transition, Expects Line 3 Gains by Year’s End – Enbridge Inc. has assured shareholders that it would stay strong by adapting to the energy transition even as the Canadian midstream giant faces ongoing opposition from fossil fuel foes over its projects. “We believe that in all practical scenarios our assets will remain critical to supporting long-term energy demand,” said Enbridge President Al Monaco as the firm’s Calgary head office released mid-year financial results.”Existing infrastructure is going to play a key role in the transportation and storage of future energy supplies, ensuring affordable and reliable access to conventional and low-carbon energy.”Enbridge reported that the biggest, most contested item on its project agenda – the $2.6-billion Minnesota leg in its Line 3 oil pipe replacement project – has stayed on track by defeating court challenges and surviving right-of-way protest rallies.”With the Canadian, North Dakota and Wisconsin segments complete, and Minnesota construction progressing well, we expect Line 3 to be fully in service during the fourth quarter,” Monaco said. “Line 3 is first and foremost a critical integrity project that will improve safety and further reduce environmental risks.”Financial gains from the project are expected by the end of this year as shippers pay tolls to use the new pipe that will add 370,000 barrels daily to Line 3capacity by enabling it to restore full operating pressure after a decade of safety restrictions on the old conduit.Monaco added that Enbridge continues to advance a C$17-billion array of pipeline, gas utility, hydrogen, and renewable power projects across Canada and the United States, and overseas in France.

Line 3 pipeline to be in service by end of year, despite legal challenges: Enbridge– Enbridge Inc.’s Line 3 pipeline replacement is on track to be in service by the end of the year despite ongoing protests and recent court challenges, the Calgary-based company said Friday. The $9.3-billion project – which is expected to add about 370,000 barrel per day of crude oil export capacity from Western Canada into the U.S. – was handed a victory last month by the Minnesota Court of Appeals, which affirmed the approvals granted by independent regulators that allowed construction on the Minnesota leg to begin last December. However, Indigenous and environmental groups opposed to the project have appealed to the Minnesota Supreme Court, asking it to overturn the lower court’s ruling. The Minnesota Supreme Court has until mid-September to decide whether or not to hear the case. In a conference call with analysts Friday, Enbridge chief executive Al Monaco said in spite of the recent legal challenges, Line 3 remains on schedule and is now 80 per cent complete. “Construction-wise, we’re tracking to schedule,” Monaco said. “We’re moving along well and continue to work on water crossings. All that to say, we’re on track for a Q4 in service.” The Line 3 replacement will carry oil from Alberta to Enbridge’s terminal in Superior, Wisconsin. The Minnesota leg of the project – the last section remaining to be completed – has been met by protests along the route, with more than 500 demonstrators having been arrested or issued citations since December. Opponents of the project – including Indigenous groups the White Earth Band of Ojibwe and the Red Lake Band of Chippewa, as well as environmental groups like the Sierra Club and Honor the Earth – say the Line 3 expansion will accelerate climate change and also poses a risk of oil spills in environmentally sensitive areas. The Line 3 expansion is a critical project for Canada’s energy sector, which has been hamstrung by a lack of pipeline infrastructure in recent years. An IHS Markit report from December found that delays in the expansion of the export pipeline capacity have contributed to lower prices in Western Canada, representing a loss of $17 billion for the crude oil industry over the last five years.

Public may not know Enbridge’s progress on Line 3 jobs promises until construction ends – Enbridge pledged to hire thousands of local workers for its Line 3 pipeline project. But we may not know whether they fulfilled that promise until the pipeline is completed. The Canadian energy company’s pledge to create jobs in rural communities was a major selling point for the $4 billion project. But Enbridge only has to publicly report worker residency numbers annually, according to a Public Utilities Commission project permit, and an update isn’t due until after November 2021. The pipeline is more than 60% complete and scheduled to be operational by the fourth quarter of this year, Enbridge says. When asked Tuesday if Enbridge would share recent worker residency numbers or planned to provide an update before November, spokesperson Juli Kellner said the company is “on track with reporting per the PUC Line 3 Replacement permitting requirements.” Enbridge signed an agreement with four unions in December 2019 that guaranteed only union workers would be hired for Line 3 construction jobs. The company has repeatedly said it expected to fill about half the 4,200 jobs with local workers. Enbridge’s worker residency report filed in February covered hiring through Dec. 31, the first month of construction. About 33% of the 4,600 workers were from Minnesota, and they had put in roughly 28% of hours worked on the project. Kellner said Tuesday the labor agreement stipulates that contractors supply half the workforce, and local union halls provide the other half. The local union halls often include members in neighboring states, she said.

Indigenous TikTok Creators Banned Over Pipeline Protest –After live streaming police violently crashing a religious ceremony and Pipeline 3 protest at Red Lake Treaty Camp – where cops threw down a protestor and ripped their shirt – TikTok banned the account of the person who filmed it, @Quiiroi, a Two Spirit Indigenous educator.The ban lasted for over a week.”About halfway during the ceremony, I went to sit down and take a break, I hear screams [and] I come rushing with my camera, I immediately [turned] my live stream on. Police were there holding a line,” they told the Daily Dot.Pipeline 3 is a pipeline expansion by oil company Enbridge that cuts across native land in the Midwest.The livestream by Quiiroi showed police officers from local counties attacking and arresting protestors. That including five to six officers slamming Alex Golden Wolf, a Two Spirit Indigenous leader of the White Earth Nation, to the ground and tearing their shirt before arresting them. “They showed up with tear gas and rubber bullets and guns. We’re in camping gear. I was wearing this camisole and flip flops. And a bandana to keep the sun off the top of my head,” Quirroi said. “Why are [the police] in riot gear?”Over 20 protestors were arrested in the police raid and taken to Pennington County, Minnesota jail.

Pipeline protester convicted — Brock Hefel, 25, of Dubuque, Iowa, was found guilty in Hubbard County District Court of charges related to his opposition to the Line 3 pipeline replacement project.According to a press release from the Hubbard County Attorney’s Office, Hefel was charged with one count each of unlawful assembly and obstructing a public right of way, based on incidents that occurred on June 15.Assistant County Attorney Anna Emmerling prosecuted the case. After a two-day trial, the jury found Hefel guilty of both charges and was taken into custody to await sentencing, the release states. According to the Hubbard County Sheriff’s Office, Hefel was also arrested on July 27 in Hubbard County after he and another man locked themselves in a “sleeping dragon” device and crawled more than 1,500 feet inside a section of pipe at a Line 3 work site in Straight River Township.

Shot with Rubber Bullets, Hospitalized, Jailed: Line 3 Protester Tara Houska Decries Police Attack | Democracy Now! – (video & transcript) At least 20 water protectors were brutally arrested in Minnesota as resistance to the Enbridge Line 3 pipeline continues, and they say state and local police have escalated their use of excessive force, using tear gas, rubber and pepper bullets to repress opposition to Line 3, which, if completed, would carry Canadian tar sands oil across Indigenous land and fragile ecosystems. “The level of brutality that was unleashed on us was very extreme,” says Indigenous lawyer and activist Tara Houska, who suffered bloody welts after she was shot with rubber bullets, then arrested and held in Pennington County Jail over the weekend, where several water protectors say they were denied medical care for their injuries, denied proper food and some reportedly held in solitary confinement. AMY GOODMAN: We end today’s show in Minnesota, where at least 20 water protectors were brutally arrested over the weekend as resistance to the Enbridge Line 3 pipeline continues. Water protectors say state and local police have escalated their use of excessive force, using tear gas, rubber and pepper bullets to repress Line 3 protesters. On Sunday, Indigenous lawyer and activist Tara Houska published photos of herself on social media with bloodied welts on her arms after she was shot with rubber bullets during an action last week. Houska and 19 others were held in Pennington County Jail over the weekend, where several water protectors say they were denied medical care for their injuries, were denied proper food, and some were reportedly held in solitary confinement.Well, Tara Houska joins us now for more from the Namewag Camp in Minnesota, founder of the Giniw Collective and is Ojibwe from Couchiching First Nation.Welcome back to Democracy Now!, Tara. Can you describe what happened when you were arrested and the escalation of force that the police are using against you?

New front in Line 3 legal fight: Wild rice is plaintiff in lawsuit against DNR – Opponents of the new Line 3 oil pipeline being built across northern Minnesota have argued for years that it endangers dwindling stands of wild rice, a plant sacred to many Indigenous people.Now, the wild rice is speaking up for itself. The water-dwelling plant is the lead plaintiff in a novel lawsuit by the White Earth Band of Ojibwe against the Minnesota Department of Natural Resources (DNR). The legal action comes during a summer of intense protest and demonstration as the pipeline nears completion.The complaint, filed Wednesday in White Earth Nation Tribal Court, advances a paradigm-shifting legal theory that nature itself has rights to exist and flourish and is not simply human property.Some might call the argument extreme, others might call it ancient.It’s the first “rights of nature” case brought in a tribal court in the U.S., according to Frank Bibeau, a lawyer for the White Earth tribe, and the second such case to be filed in any court in the U.S. In April, what is considered the first case of its kind was filed in Florida.Plaintiffs include manoomin (the Ojibwe word for wild rice that translates to “good berry”), several White Earth tribal members and Indian and non-Indian Water Protectors who have demonstrated along the 340-mile Line 3 construction route in Minnesota.They accuse the DNR of failing to protect the state’s fresh water by allowing Calgary-based Enbridge to pump up to 5 billion gallons of groundwater from construction trenches during a devastating drought. Further, they assert the regulator has violated the rights of manoomin along with multiple treaty rights for tribal members to hunt, fish and gather wild rice outside reservations.They want the state to stop the extreme water pumping and for authorities to stop arresting people for trying to defend codified rights.”We’re not protesting, we’re defending,” Bibeau said. “It’s 2021 now and a bunch of us have been to law school. We’re not going to let this happen to us. We know what our rights are.”To date, more than 700 people have been charged in demonstrations along the Line 3 construction route, according to Bibeau. Some have chained themselves to equipment or taken other actions to disrupt construction. There have been claims of police brutality.

Three wells on fire in Dakota Prairie Grassland -Three wells are on fire in the Little Missouri National Grassland a half mile south of Lake Sakakawea, according to reports heard Tuesday during the North Dakota Industrial Commission, and the North Dakota Department of Environmental Quality has issued an air quality advisory for residents of the area.Air quality in the area may be monitored athttps://www.airnow.gov. DEQ officials say the state’s ambient air-quality network is well positioned to monitor the air quality in the area around the fire.”Many weather apps specify local Air Quality Index (AQI). Air quality conditions can change hourly and may be impacted by local weather patterns – such as western forest fire smoke – or localized incidents,” said Environmental Scientist Adam Rookey.People sensitive to particle pollution should consider reducing their outdoor exposure during periods of moderate to poor AQI. Always contact your healthcare provider immediately if you are experiencing trouble breathing.Department of Mineral Resources Director Lynn Helms told NDIC Commissioners the fires can be seen all the way to Tioga, and that he has been told the wells should be out by the end of the week. The company, involved, Petro-Hunt, has brought in Wild Well Control to assist them in removing surrounding equipment to safely shut the wells down at the location.Petro-Hunt spokeswoman Beth Babb said the fire started about 1:35 p.m. Thursday, July 22 in McKenzie County.No injuries were caused by the fire, and no surface grassland or groundwater sources have been affected.”The company’s focus is to get the fire out as quickly and safely as possible,” Babb told the Williston Herald.The incident has been contained to the well pad so far, and a fire suppression plan is in place in case a wildland fire is triggered, according to a release from Dakota Prairie Grasslands. There is also a monitoring plan in place for when the incident is over. “Petro-Hunt, brought in resources and set up its incident command post as well as several med-evac and staging areas over the weekend,” Lucas Graf told the Williston Herald. “They expect the fire to continue for another week before conditions are safe enough to get their well specialist team in to reestablish control.”

Western North Dakota oil well fire burns into 12th consecutive day – An oil well fire bordering Lake Sakakawea in McKenzie County burned into its 12th day on Monday, Aug. 2, with emergency responders continuing to fight intense flames and temperatures in order to get three ruptured wells under control. Smoke has been visible from miles away since the fire began on Thursday, July 22, and state officials, local emergency responders and the company operating the wells said they have few updates to report on the status of the fire since the end of last week. The fire is burning in three of four oil wells on a well pad north of Keene and a half-mile south of the lake. The wells are operated by the Texas-based producer Petro-Hunt. Last week, North Dakota Oil and Gas Director Lynn Helms attributed the fires to the failure of a blowout preventer, a crucial mechanical valve used to stop the uncontrolled release of oil. Lucas Graf, a district ranger with the U.S. Forest Service in McKenzie County, said Petro-Hunt and responders are hoping to have the well pad under control and the fire extinguished “in the next couple of days” or by the end of this week, depending on weather conditions and other factors at the well site. Responders over the weekend made an unsuccessful attempt to plug the first blown-out well, Graf said, and are expecting to make a second attempt in the next couple of days. In an email, Petro-Hunt spokesperson Beth Babb said, “the situation is dynamic and completely dependent on well and weather conditions.” She added, “We are still focusing all of our attention on getting the fire extinguished, along with our well control contractor.” Last week Petro-Hunt brought in the oilfield emergency response company Wild Well Control, also based in Texas, for on-site assistance. Several local and state departments have also sent responders to the scene in the last week. As of Monday afternoon, Wild Well Control was still moving burnt equipment out of the way to establish a clear path to the wells, Department of Mineral Resources spokesperson Katie Haarsager said in an email. Graf said that responders have successfully killed the fourth well on the site to avert another blowout preventer failure, and have constructed a barrier blocking the three burning wells from the fourth. Graf added that Petro-Hunt has reported to the Forest Service that one of the three wells has blown-out more severely than the others, making that one the highest priority to plug. “It’s still a highly technical and difficult process, of course, to regain control of the other two, but I think it’s really the first one that will be the biggest challenge,” he said. Initial reports from Petro-Hunt to the state said 100 barrels of oil and 100 barrels of produced water spilled at the site. Dave Glatt, Director of the Department of Environmental Quality, said he’s taking those figures with a grain of salt for now, since it’s difficult to know the extent of the spill until the fire is extinguished.

That Petro-Hunt Pad Well Fire North Of Charlson — It’s Still Burning — Update — August 3, 2021 — See this post for background to this story. See also this post. 12th consecutive day: the oil well fire continues to burn. This story was posted at 6:05 p.m., August 2, 2021, Monday night. Twelve days and they “hope” to have the fire out by the end of the week. Are we talking almost three weeks? Eighteen days? Responders have continued to battle intense flames and temperatures in an effort to extinguish fires in three oil wells near Lake Sakakawea in McKenzie County. Officials are aiming to regain control of the wells and douse the fires by the end of the week. … in order to get three ruptured wells under control. … fire began July 22, 2021, Thursday … … and the company operating the wells said they have few updates to report on the status of the fire since the end of last week … … one-half mile south of the lake .. … NDIC Lynn Helms said the fires were due to the failure of a blowout preventer …a valve used to stop the uncontrolled release of oil … … an unsuccessful attempt to plug the first blown-out well, Graf said, and are expecting to make a second attempt in the next couple of days. …. As of Monday afternoon, Wild Well Control was still moving burnt equipment out of the way to establish a clear path to the wells, Department of Mineral Resources spokesperson Katie Haarsager said in an email. Graf said that responders have successfully killed the fourth well on the site to avert another blowout preventer failure, and have constructed a barrier blocking the three burning wells from the fourth. …one of the three wells has blown-out more severely than the others, making that one the highest priority to plug.

Dakota oil pipeline expansion completed: Update – An expansion of Energy Transfer’s 570,000 b/d Dakota Access crude pipeline (DAPL) is complete, adding takeaway capacity out of the Bakken shale.The capacity on DAPL has been increased by 180,000 b/d to 750,000 b/d, Energy Transfer said today.There has been a “significant increase” for August nominations as minimum volume commitments on the expanded DAPL capacity kicked in at the start of the month, Energy Transfer said.The company has said previously that it plans to expand DAPL to as much as 1.1mn b/d by adding pump stations. Other partners in the Bakken system include Enbridge and Marathon Petroleum’s midstream affiliate, MPLX.The expansion will include the entire Bakken system which includes DAPL from the Bakken shale to Patoka, Illinois, and the connecting Energy Transfer Crude Oil pipeline (ETCOP) to the US Gulf coast. The expansion does not require any construction on the mainline or building new pipeline segments.Earlier today, a partner in the Bakken system, Phillips 66 Partners said that the Bakken optimization project “continues to progress with the next phase of incremental capacity commencing service in August.”The increased capacity is supported by minimum volume commitments from long-term contracts, Phillips 66 Partners said.A US judge in June closed out a long-running lawsuit that sought to halt operations of DAPL, two months after ruling the pipeline could remain in service while the government prepares a new environmental review.US district court judge James Boasberg dismissed the rest of a lawsuit filed by Native American tribes led by the Standing Rock Sioux who oppose the pipeline. The order brought an end to a high-profile case that attracted national attention because of its potential to shut a major conduit of Bakken crude to the US midcontinent and Gulf coast. Energy Transfer said today that it continues to cooperate with the Army Corps of Engineers on the new DAPL environmental review.

Company fined $35M in North Dakota drilling wastewater spill – An oil company that waited more than five months to investigate and report a 2014 pipeline spill in North Dakota that discharged more than 29 million gallons of drilling wastewater has agreed to pay more than $35 million in civil and criminal fines. the U.S. Department of Justice said Thursday. Federal officials said it’s the largest inland drilling spill of produced water, a waste product of hydraulic fracturing, or fracking. The spill from the 96-mile (154.50-kilometer) underground pipeline contaminated more than 30 miles of Missouri River tributaries as well as land and groundwater, the complaint said. It was visible in photographs taken by satellites.The complaint against Summit Midstream Partners LLC says the data collected by the company in August 2014 showed a significant drop in the pipeline pressure, indicating a rupture in the newly built line. Despite concerns raised in October 2014 by Summit’s construction manager and engineer, the company did not identify the leak until January 2015, after an employee walked the line.Court documents show that Summit’s construction manager sent an email to other employees in October 2014 about “extreme low pressure” on the system. The facilities engineer responded: “Not good. We may want to consider shutting it down.” Summit continued to operate the line.Summit eventually reported a 2.9 million gallon spill of produced water even though the leak was 10 times larger, according to the civil complaint filed against Summit and related companies, Meadowlark Midstream Company LLC and Summit Operating Services Company LLC.

Trump’s ANWR Drilling Leases Under Review: Biden Admin Looking at ‘Legal Deficiencies,’ Environmental Impacts – The Interior Department launched its official review of oil and gas leasing in the Arctic National Wildlife Refuge (ANWR), the agency announced Tuesday.The Biden administration found “multiple legal deficiencies” in a prior review of the program’s implementation under the Trump administration, andsuspended lease sales in the Arctic National Wildlife Refuge in June.A public process will be used to determine the scope of the review. The Trump administration pushed throughan ultimately lackluster sale of oil and gas leases in the immense, environmentally and culturally sensitive refuge in the final days before President Biden took office.As reported by Alaska Public Media:At the very least, the new process could delay drilling by years. To Mike Scott, senior representative for the Sierra Club’s Our Wild Alaska campaign, it’s not enough.“This is really the time that Congress should take action, and restore the protections by dismantling the leasing program,” he said.Among the new alternatives to be considered are “those that would: designate certain areas of the Coastal Plain as open or closed to leasing; permit less than 2,000 acres of surface development throughout the Coastal Plain; prohibit surface infrastructure in sensitive areas; and otherwise avoid or mitigate impacts from oil and gas activities,” the notice in the Federal Register says.After decades of debate, Congress in 2017 required Interior to hold two auctions for drilling leases in the Arctic Refuge. The first, on Jan. 6, drew just three successful bidders and roughly $11.5 million dollars – far less than Congress was counting on. On Jan. 19, the Trump administration issued seven leases to AIDEA, a state-owned corporation, and one apiece to two small firms.

Biden administration kicks off second look at Arctic refuge drilling -The Biden administration is formally launching its review of the Trump administration’s opening of the Arctic National Wildlife Refuge to drilling after a prior determination that its predecessor’s action had “legal deficiencies” The Interior Department announced the review in a notice of intent scheduled to be published in the Federal Register on Wednesday, which indicated that it would carry out a rigorous environmental review known as an environmental impact statement. The review will serve “to identify the significant issues, including any legal deficiencies in the Final EIS [Environmental Impact Statement],” Laura Daniel-Davis, principal deputy assistant secretary for land and minerals management, said in the notice. The supplemental EIS ordered by the department will analyze the potential effects of leasing on surface waters, wetlands and vegetation, as well as wildlife such as caribou, birds and polar bears and the greenhouse gas emissions caused by leasing activity. It will also consider possible alternatives such as declaring some areas of the Coastal Plain off-limits to leasing, banning surface infrastructure in “sensitive areas” and barring more than 2,000 acres of surface development across the Coastal Plain. The formal announcement in the Federal Register notice follows an announcement made in June that there will be a further environmental review after the Biden administration said that it found the legal deficiencies in the formal decision that opened up the refuge for drilling. This included what Interior Secretary Deb Haaland described as a “failure to adequately analyze a reasonable range of alternatives” in the prior environmental review. A 2017 law passed during the Trump years required at least two lease sales – one of which has already occurred – by the end of 2024, so an attempt to completely reverse could present legal difficulties. But the Biden administration could put new stipulations on drilling. It has also indicated that it may seek to make changes to existing leases, saying in June that after the review they would either be reaffirmed, voided or subject to additional measures to lessen their environmental impacts. In the meantime, the leases are suspended. The Federal Register notice formally starts the public scoping process for the review, during which the public is allowed to weigh in with comments. While many environmentalists oppose drilling in the refuge, some called on the Biden administration and Congress to go even further. “The Trump administration aggressively moved to get leases into the hands of oil companies prior to the end of its only term, and until those leases are canceled and the Arctic Refuge drilling mandate reversed, one of the wildest places left in America will remain under threat,” Kristen Miller, acting executive director for the Alaska Wilderness League, said in a statement. “We call on the Biden administration to work with Congress to repeal the oil leasing mandate and buy back those leases as part of the upcoming budget package, restoring protections to the Arctic Refuge coastal plain.”

Groups Welcome Biden Review But Demand Congress Permanently Protect Arctic Refuge From Drilling – Alaska Native News -Indigenous and environmental groups on Tuesday welcomed the U.S. Interior Department’s decision to review the Trump administration’s controversial move opening up previously protected land in Alaska to drilling despite threats to local communities and wildlife as well as the global climate. The department’s notice says the new environmental review of the leasing program for oil and gas drilling in the Coastal Plain of the Arctic National Wildlife Refuge (ANWR) will “identify the significant issues, including any legal deficiencies” in a Trump-era analysis. In a statement, Sovereign Inupiat for a Living Arctic (SILA) expressed appreciation for “the Biden administration’s intention to address the insufficiencies and legal violations in the prior administration’s oil and gas leasing program.” The group also called for Congress to repeal the program entirely, noting the key role that federal lawmakers played in opening ANWR up to the fossil fuel industry. “We look to our representatives in Congress to now step up and do their share of the work in protecting this land that provides for Inupiat and Gwich’in communities,” SILA said. “It is time to protect the refuge and rescind the leasing program from the Tax Cuts and Jobs Act of 2017.” “We remind members of Congress that traditional Inupiat values include hunting traditions, respect for nature, and spirituality, all of which this law impacts in our communities,” SILA added. “Please, act now to move to change laws that will impact Inupiat communities, Gwich’in communities, and the rest of the world.”

ConocoPhillips Posts Highest Profit Since 2018 — ConocoPhillips beat estimates as rising commodity prices led America’s biggest independent oil producer to the highest profit in nearly three years. Conoco posted adjusted earnings of $1.27 a share in the second quarter, compared with the $1.13 estimate in a Bloomberg survey of analysts. The stock rose 1.9% in pre-market trading. U.S. energy companies are using buybacks and dividends to attract investors to the sector after years of poor performance left it making up just 2.6% of the S&P 500, down from more than 12% a decade ago. Conoco became one of the first large energy companies to increase shareholder returns in response to high commodity prices when it lifted its share buyback by two thirds to $2.5 billion a year in June. As such there was little expectation the company would further increase cash returns. CEO Ryan Lance has been lowering capital spending and slowing production growth as part of a pledge to reinvest only half of its cash flow in new drilling and return the rest to shareholders. The promise underscores how U.S. oil producers are maintaining production discipline and are unlikely to go back to high growth rates seen in the past. A key question is what Conoco executives plan to do with the company’s cash pile worth about $7 billion. The company is said to be among several suitors for Royal Dutch Shell Plc’s Permian Basin assets, worth as much as $10 billion, people familiar with the matter said last month. The U.S. shale patch has become a hotbed of merger activity this year, and Conoco secured the biggest deal to date with the $13 billion stock purchase of Concho Resources Inc.

Oil giant BP ups dividend and confirms share buybacks as it posts better-than-expected profit – Oil and gas giant BP beat second-quarter earnings expectations on Tuesday, while expanding its dividend and share buyback program. The U.K.-based energy major said it will buy back $1.4 billion of its own shares in the third quarter on the back of a $2.4 billion cash surplus accrued in the first half of the year. It also increased its dividend by 4% to 5.46 cents per share, having halved it to 5.25 cents per share in the second quarter of 2020. It anticipates buybacks of around $1 billion per quarter and an annual dividend increase of 4% through 2025, based on an estimated average oil price of $60 per barrel. The energy major posted full-year underlying replacement cost profit, used as a proxy for net profit, of $2.8 billion. That compared with a loss of $6.7 billion over the same period a year earlier and $2.6 billion net profit for the first quarter of 2021. Analysts polled by Refinitiv had expected second-quarter net profit of $2.06 billion. CEO Bernard Looney told CNBC on Tuesday that a combination of strong underlying performance, an improving balance sheet and higher commodity prices had enabled the company to up its returns to shareholders. “We have raised our own plan from $50 to $60 (average oil prices) for the next several years – that is on the back of strong demand. GDP is back to pre-pandemic levels and the vaccines are clearly working, OPEC+ is holding discipline and supply is tightening, particularly in U.S. shale,” he said. The results reflect a broader trend across the oil and gas industry as energy majors seek to reassure investors they have gained a more stable footing amid the ongoing coronavirus pandemic. The British-Dutch multinational Royal Dutch Shell, France’s TotalEnergies and Norway’s Equinor all announced share buyback schemes last week. Share prices of the world’s largest oil and gas majors are not yet reflecting the improvement in earnings, however, and the industry still faces a host of uncertainties and challenges.

Subsidies really do prop up the oil and gas industry. Here’s the most important one to get rid of -Fossil fuel subsidies are a vexed and peculiar topic. On one hand, everyone seems to agree they’re bad and should be eliminated (Biden’s jobs bill takes aim at them, for instance). On the other hand, they never go away.In part, this is because we lack a clear understanding of what constitutes a subsidy and what impact subsidies have. Analysts are forever arguing over exactly what counts, trying to tally up the total subsidies fossil fuels receive, but there are very few bottom-up attempts to document the concrete effects of subsidies on the economics of oil and gas projects.That’s why I was interested in this new paper in Environmental Research Letters, by Ploy Achakulwisut and Peter Erickson of the Stockholm Environment Institute and Doug Koplow of Earth Track. It breaks down the effect of 16 specific, direct U.S. fossil fuel subsidies on the profitability and emissions of U.S. oil and gas production.As for those subsidies, there are three basic categories: “forgone government revenues through tax exemptions and preferences; transfer of financial liability to the public; and below-market provision of government goods or services.” (Note that this study does not get into unpriced environmental externalities like air pollution and greenhouse gases, which are themselves a kind of subsidy.)To take just a couple of examples, the effect a subsidy will have on the decision of whether to invest in a new oil and gas project will depend on oil and gas prices and the hurdle rate. (The hurdle rate is the rate of return investors require to fully cover risks; more aggressive decarbonization efforts will presumably mean more risk and thus a higher hurdle rate.) The study actually runs several different scenarios based on different values for those variables, producing a cost curve for each region of the U.S. It gets complicated.What’s interesting is that the benefits to oil and gas are not spread evenly over different subsidies. In fact, one in particular dwarfs the others: the expensing of intangible exploration and development costs (“intangible drilling costs,” or IDC), a policy that’s been around for over a century. The chart below shows the “average effect of each subsidy on the internal rate of return (IRR) of new, not-yet-producing oil and gas fields, at average 2019 prices of USD2019 64/barrel of oil and USD2019 2.6/mmbtu of gas.”

Democrats Seek $500 Billion in Climate Damages From Big Polluting Companies – NYTimes – Under a draft plan Democrats are circulating, the Treasury Department would tax a handful of the biggest emitters of planet-warming pollution to pay for climate change. – Democrats in Congress want to tax Exxon, Chevron and a handful of other major oil and gas companies, saying the biggest climate polluters should pay for the floods, wildfires and other disasters that scientists have linked to the burning of fossil fuels. The draft legislation from Senator Chris Van Hollen of Maryland directs the Treasury Department and the Environmental Protection Agency to identify the companies that released the most greenhouse gases into the atmosphere from 2000 to 2019 and assess a fee based on the amounts they emitted. That could generate an estimated $500 billion over the next decade, according to Mr. Van Hollen. The money would pay for clean energy research and development as well as help communities face the flooding, fires and other disasters that scientists say are growing more destructive and frequent because of a warming planet. The bill for the largest polluters could be as much as $6 billion annually spread over 10 years, according to a draft of the plan. “It’s based on a simple but powerful idea that polluters should pay to help clean up the mess they caused, and that those who polluted the most should pay the most,” Mr. Van Hollen said in an interview. “Those who have profited the most should help now pay the damages that they’ve already caused.” The proposal comes as the Senate prepares to vote on a bipartisan $1 trillion infrastructure package that includes billions of dollars to help communities prepare for and recover from extreme weather driven by climate change. Democrats hope to later pass a separate $3.5 trillion budget package that will include measures to cut carbon dioxide, methane and other greenhouse gases that result from burning fossil fuels and that are helping to drive up global temperatures. A tax on polluting companies has the support of liberal lawmakers including Senator Bernie Sanders, the Vermont independent, as well as Senators Edward J. Markey and Elizabeth Warren of Massachusetts and Sheldon Whitehouse of Rhode Island, all Democrats. Mr. Van Hollen says he is optimistic that his legislation will find broad support within his party and be attached to the budget reconciliation package, which Democrats hope to pass without Republican votes. But that would require all Democrats in the narrowly divided Senate to back the measure, including Joe Manchin III of West Virginia, who has routinely argued against anti-fossil fuel legislation.

Big Oil spent $10 million on Facebook ads last year – to sell what, exactly? —Online advertisers are always trying to sell you something, and in the case of slip-on sneakers or leather handbags, that something is pretty clear. But other times, the motive behind a sponsored post is less transparent. Why, for instance, are oil companies buying prime space in your social media feed to prattle on about “innovative” climate solutions and visions of a “lower-carbon future”?A new report makes the case that the oil and gas industry is trying to sell you a story – one that casts these companies as paragons of sustainability and seeks to delay policies that would address climate change. Last year, the oil and gas industry spent at least $9.6 million on ads on Facebook’s U.S. platform, according to an analysis by the think tank InfluenceMap. Just over half of this spending came from one company, ExxonMobil.”The oil and gas industry is engaging in this really strategic campaign using social media and the tools available, particularly these targeting tools on Facebook, to reach a really broad audience pretty easily,” said Faye Holder, program manager at InfluenceMap.The report looked at roughly 25,000 of these ads, analyzing their messages and whom they were targeting. The decision to focus on Facebook ads, which represent only a fraction of the oil industry’s wider campaign to influence the discourse on climate change, was made for data reasons. “We just looked at Facebook,” Holder said. “That is because the other social media platforms don’t even offer this transparency.”Oil companies have long sought the help of public relations whizzes to burnish their reputations, painting themselves as environmental champions, plastering their logos all over science museums and jazz festivals, and even hiring Instagram influencers to tout the merits of gas stoves. In recent years, climate advocates have honed in on ways to counter these tactics – launching a campaign demanding that PR firms drop fossil fuel clients, for instance, or trolling oil companies on social media. Some climate groups have decided to fight fire with fire, recently funneling $1 million directly into anti-oil advertisements.The oil industry’s more recent ads use subtler messages than outright climate denial to undermine action on global warming, such as portraying natural gas as a green fuel source and arguing that decarbonization would make energy unaffordable. Last year, companies’ Facebook ad spending soared when it looked like the federal government might do something to address rising emissions. For example, spending jumped dramatically last summer when then-presidential candidate Joe Biden released his climate plan, and stayed high until after the November election.

Russian supply curbs exacerbate squeeze on European gas market -Russia has exacerbated a shortage of European natural gas supplies that has driven prices to a 13-year high by quietly limiting top-up sales to customers, according to executives and analysts.Pipeline exports of natural gas from Russia’s state-backed monopoly Gazprom to continental Europe have dropped roughly one-fifth in 2021 on pre-pandemic levels despite a sharp rebound in demand and low stockpiles of the important fuel. The imbalance has helped send prices in Europe to the highest levels since 2008, increasing energy costs for homes and businesses. The rise in prices comes during a period of volatile relations between Russia and the West. On Wednesday, Russia said its forces fired warning shots at a British destroyer off the coast of Crimea, claims the UK denied. At the same time, Germany and France sought this week to cool tensions with Russia, proposing a new EU plan for closer engagement with Moscow. Energy industry executives and analysts said that while Gazprom was meeting its long-term contractual obligations, its reluctance to boost supplies to Europe through more immediate measures such as spot market sales was putting pressure on the market. “Gazprom is just trying to maximise its profits at a time when spot prices are high, gas storage is empty and LNG demand in Asia is strong,” said one executive at a German energy company. “They’re just being opportunistic.”Gazprom said in a statement that it “supplies gas precisely in line with consumers’ requests”. “It is based on those very requests as well as the possibilities for portfolio capacity optimisation that the company books transportation capacity in particular directions,” it added.Several industry participants said Gazprom’s moves appeared designed to support prices and may be aimed at pressuring EU governments to approve the controversial Nord Stream 2 pipeline to Europe.”Gazprom is effectively saying to the EU: ‘give us the green light for Nord Stream 2 and we will send you all the gas you need’,” said Tom Marzec-Manser, lead European gas analyst at ICIS. “‘Don’t, and we won’t. We’re not going to send the extra gas via Ukraine and you’ve seen what that means for wholesale prices in a tight global [liquefied natural gas] market,'” he added.

Russia Oil and Condensate Output Rises— Russia increased oil production in July for the first time in three months, after more generous quotas were extended to the entire OPEC+ alliance. Producers pumped 44.24 million tons of crude and condensate last month, according to preliminary data from the Energy Ministry’s CDU-TEK unit. That’s about 10.46 million barrels a day, or 0.3% higher than in June, Bloomberg calculations show, based on a 7.33 barrels-per-ton conversion rate. It’s difficult to assess Russia’s compliance with the output-cut deal between the Organization of Petroleum Exporting Countries and its allies, as CDU-TEK’s data don’t provide a breakdown between crude and condensate, which is excluded from the deal. If Russia produced the same level of condensate as in June — about 900,000 barrels a day — then daily crude-only output would be some 9.56 million barrels, slightly above its July quota of 9.495 million barrels. Deputy Prime Minister Alexander Novak told reporters on Friday that the nation’s adherence to the deal would be about 100% in July. Russia’s compliance increased to 96% in June from 94% in May and 91% in April, the International Energy Agency said in its latest monthly report. Planned maintenance led to a drop in June’s crude-only volumes, according to the IEA. Under the deal with OPEC+, Russia was allowed to raise its crude-only production by a total of 116,000 barrels a day from May to July. Last month the alliance agreed to raise output by 400,000 barrels a day each month starting August, continuing until all of its halted output has been revived. That means that, starting August, Russia can increase its daily crude production by 100,000 barrels each month, according to Novak.

In four years, Nigeria loses 2.5trn oil barrels – Nigeria has lost 4.5 trillion barrels of oil to theft in the last four years, according to data from the Nigeria Natural Resource Charter (NNRC).Another data from the National Oil Spill Detection and Response Agency (NOSDRA) showed that the country recorded 4,919 oil spills between the period of 2015 to March 2021.The Ministry of Environment said this issue is a huge detriment to the environment and leads to a significant loss of revenue.Global statistics show that Nigeria loses around 400,000 barrels of oil per day, more than any other country in the world. However, mitigation measures through the enforcement of laws, regulations and guidelines such as the Environmental Impact Assessment (EIA) Act, are being taken to lessen the oil losses. For both oil spills and oil theft, it is recommended that transparency and accountability should be adhered to in the relations among government, oil-producing communities and multinational corporations.

China-Australia tensions create LNG trade uncertainty Rising political tension is creating concern for the China-Australia liquefied natural gas (LNG) trade, with other global LNG suppliers the potential beneficiaries of this tension. LNG is a vital resource supporting China’s push towards a cleaner energy mix. Over the past five years, reinforced by gas market reforms and infrastructure development, the country recorded double-digit gas demand growth across all sectors. Wood Mackenzie’s gas and LNG consultant, Xueke Wang, said, “The absence of Australian LNG could disrupt supply stability and increase the call on coal in the near term. “But in the longer term, it may also force China to turn to suppliers elsewhere, opening the door for rival exporters to increase their share of Asia’s largest LNG market.” Over the past decade, both Chinese National Oil Companies (NOCs) and private companies have acquired Australian upstream positions. Following the pandemic and oil price crash, Chinese overseas investment has slowed. And with rising trade tensions and new challenges in obtaining Australian Foreign Investment Review Board approval, new investment by Chinese companies in Australia is slowing. Ms Wang said, “In May, China suspended the China-Australia Strategic Economic Dialogue shortly after Australia cancelled its Belt and Road agreement. According to our sister company Verisk Maplecroft, this is one of a series of events that have inflamed diplomatic tensions and triggered a deep freeze in China-Australia trade relations. “China and Australia are now locked in a cycle of tit-for-tat policy action, and energy trade has been a key battlefield. If the situation deteriorates further, this could have a profound impact on China’s LNG market as Australian LNG makes up around half of China’s total LNG imports.” Chinese companies have a long history of participation in Australian upstream and LNG projects. China’s three NOCs – CNOOC, PetroChina and Sinopec – all have a large Australian LNG footprint.

Covid Batters Leading Asia Importer— Indonesia’s Covid-19 crisis is hammering gasoline demand in Southeast Asia’s leading economy, echoing a slump in India earlier this year. Strict curbs on travel amid a surge in virus cases are taking a toll on consumption, with gasoline and diesel usage plummeting during the initial phase of restrictions from July 3-25. Shipments of gasoline into Asia’s biggest importer of the fuel have sunk almost a quarter, according to Vortexa Ltd. The drop-off in consumption highlights the threat to the energy market posed by the rapid spread of the delta coronavirus variant, including a flare-up in China. Indonesia has surpassed Brazil and India in daily cases and death counts to become a new global virus center, with confirmed cases jumping and fatality numbers hovering near a record. The hot spots in Asia have weighed on crude oil futures, which retreated for a second straight day on Tuesday. Indonesia’s gasoline demand from July 3-25 sank 14% from the previous month, according to PT Pertamina Patra Niaga, a unit of the nation’s state-owned energy company. Diesel usage fell about 9%, said Putut Andriatno, corporate secretary at Patra Niaga. With demand shrinking, imports of gasoline into the archipelago fell more than 23% from previous month to about 190,000 barrels a day in July, Vortexa’s Asia lead analyst Serena Huang said, citing provisional data. Imports last month were the lowest since May 2020, she added. Diesel imports increased. So far the slump hasn’t affected Asian margins for converting crude into gasoline, with plunging exports from China and better demand from other markets such a now-recovering India have more than compensated for the loss in Indonesian consumption. However, heavy rains in India and China may crimp regional gasoline demand near term, while tighter restrictions in Thailand will also weigh on the recovery, industry consultant FGE said in a note.

Fuel demand picks up in July, petrol at pre-Covid level – India’s fuel demand picked up in July as easing of pandemic-related restrictions accelerated economic activity, helping petrol consumption reach pre-Covid levels, preliminary sales data showed on Sunday. State-owned fuel retailers sold 2.37 million tonnes of petrol in July, up 17 per cent from the year earlier period. It was 3.56 per cent higher than pre-Covidpetrol sales of 2.39 million tonnes in July 2019.Sales of diesel – the most used fuel in the country – rose 12.36 per cent to 5.45 million tonnes over the previous year, but was down 10.9 per cent from July 2019.This is the second straight month that showed a rise in consumption since March.Fuel demand had recovered to near-normal levels in March before the onset of the second wave of COVID-19 infections led to the re-imposition of lockdowns in different states, stalling mobility and muting economic activity.Consumption in May slumped to its lowest since August last year amid lockdowns and restrictions in several states. Fuel demand showed signs of resurgence in June after restrictions began to be eased and the economy gathered pace.On July 30, S M Vaidya, Chairman of India’s largest oil firm IOC, had stated that petrol consumption has risen over pre-Covid levels as people prefer personal transport over public transport.Diesel sales, he said, were likely to return to pre-pandemic levels by Diwali in November if a third wave of Covid infections does not lead to reimposition of lockdown. ATF consumption, which had seen the most severe fall as air travel was restricted beginning March 2020, is likely to return to normal by the end of the current fiscal in March, he had said.

Mumbai: Juhu beach’s sand turns black following oil spill – India TV (video) The sand on over 5 kilometre stretch of Mumbai’s Juhu Beach turned black due to an oil spill on Thursday. People, who came for a walk in the morning today, said that the oil in the seawater was flowing towards the shore that has turned sand in black. However, it is still not clear how the oil spilled into the sea water.Mumbai Mayor Kishori Pednekar said that the administration will inspect the situation at the beach.”I will assign a ward officer to inspect the oil on the Juhu Beach. We don’t know the reason yet but, whenever we have the information we will share it,” she told reporters.”Usually we put sand over it but first we will inspect the situation,” she added.A Twitter user, Dr Rajesh Sarwadnya, who was at the beach, posted a video and wrote: “Waves of oil Spill today on entire 6 km Juhu Beach”Pramod Virkar, a local resident said: “We have never seen oil in the beach and in the seawater, it has happened probably due to breakdown of a steamer.”Another resident, Hari said, “The sand is sticky and we cannot walk on it. It will also harm the marine life and the environment.”

The Saudi Arabia-UAE rift that froze OPEC is a sign of things to come, experts say – – The unexpected rift between Saudi Arabia and the United Arab Emirates within OPEC in early July came as a shock to many in the Gulf region and those watching from abroad. The dispute over oil production levels temporarily froze the group’s ability to lay out its plans for the markets, sending crude prices upward. But it wasn’t the first appearance of tension between the Arab neighbors and longtime close allies, and likely will not be the last, experts who’ve long been watching the region say. “What is happening here is these are the two biggest economies in the region, in the Arab world,” Abdulkhaleq Abdulla, a political science professor in the UAE, told CNBC. “And as Saudi Arabia wants to reform its economy, privatize, etc, there is bound to be competition between them.” “Competition between the two biggest Arab economies is, I think, just starting,” Abdulla said. “And it is bound to intensify in the days to come.” The strategic alignment between Riyadh and Abu Dhabi, both of which have become increasingly active on the world stage, is evident in many areas. And it’s often associated with what is said to be a close relationship – some have even called it a “bromance” – between Saudi Crown Prince Mohammed bin Salman and his Emirati counterpart Mohammed bin Zayed. But conflicting interests have cropped up in recent months that preceded the OPEC rift. In February, Saudi Arabia announced that its government would cease doing business with any international companies whose regional headquarters were not based within the kingdom by 2024. The move waswidely seen as targeting Dubai, the Middle East’s current headquarters hub. The UAE last year announced a normalization deal with Israel, becoming the first Gulf country to do so, while Saudi Arabia has so far publicly refused to do the same. Saudi Arabia meanwhile has been working on a tentative rapprochement with rival Sunni power Turkey, with which the UAE has significant tensions as Ankara supports an Islamist ideology that Emirati leaders see as a threat. And the two Gulf powers had some diverging interests in the war in Yemen, despite being on the same side, with the Saudis supporting an Islamist party distrusted by the UAE and Abu Dhabi supporting separatist tribes that did not align with Riyadh’s goals. The UAE drew down its military activity in Yemen in 2019, while Riyadh remains embroiled in the conflict. “It has been a common assumption that the UAE and Saudi Arabia have effectively indistinguishable worldviews and interests – that the UAE is sort of an appendage or dependency of Saudi Arabia,” Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington, wrote in a blog post in July. “That has never been the case.” In early July, Saudi Arabia upped the ante by ending preferential tariffs for goods made in free zones or affiliated with Israeli manufacturers, also seen as a direct shot at the UAE, which is the free zone hub of the region. The move was followed by waves of patriotic Saudis launching a campaign via Twitter to boycott Emirati goods. This came despite the fact that the UAE is Saudi Arabia’s second-largest trading partner after China by import value. “The idea once was to create a GCC market, but now there’s the realization that the priorities of Saudi Arabia and the UAE are very different,”

Rapid Iran Oil Comeback Now Looks Less Likely— Iran’s oil comeback, already taking longer than many traders expected, will be further complicated by last week’s deadly drone attack on a tanker in the Gulf of Oman, which the U.S., U.K. and Israel all blamed on Tehran. With talks held up by a change of presidency in Tehran, the incident adds friction to a process that could return 1 million barrels of oil a day to the global market within months. Even if the allies decide against a military response, Washington may be less willing to ease sanctions on the Islamic Republic’s energy exports. “It looks inevitable that this will cast a black cloud over nuclear talks” between Iran and world powers including the U.S., said Bill Farren-Price, a director at energy-research firm Enverus. The negotiations — to revive a 2015 pact that limited Iran’s atomic program in return for sanctions relief — had already stalled. A sixth round in Vienna broke up last month. Diplomats are waiting for Iran to re-enter talks now that Ebrahim Raisi, an austere cleric who has long argued against a rapprochement with the U.S., has become president. Restoring the Joint Comprehensive Plan of Action — which then-President Donald Trump pulled the U.S. out of in 2018 — is key to Iran’s ability to increase oil production. Its crude exports have plummeted to almost nothing from more than 2 million barrels a day in mid-2018. Many oil investors had expected a new nuclear deal before Iran’s elections in mid-June. While Raisi and Supreme Leader Ayatollah Ali Khamenei could resume negotiations soon, there’s still much for the sides to overcome. Iran wants a guarantee that future U.S. administrations won’t withdraw from any deal, as Trump did. It also insists sanctions are removed across the board — on its shipping and banking industries as well as on energy exports. Washington is wary of both demands. Another sticking point is the JCPOA’s so-called “break out” clause. It was designed to constrain Iran’s nuclear activities enough that it would need a full year to build a bomb if it chose to exit the accord. Some U.S. officials believe Iranian scientists have made enough progress in the past three years to construct an atomic weapon within a few months. Still, Iran and the U.S. have both said they’ll continue to negotiate. Washington sees a deal a way to help stabilize the Middle East — even if it doesn’t address Tehran’s ballistic missiles or support for proxy forces in the likes of Yemen and Lebanon — while sanctions have battered the Iranian economy.

Oil Prices Slide As China’s Manufacturing Slows – Oil prices fell more than 1 percent on Monday after a survey found that growth in factory activity slipped sharply in China, the world’s second-largest oil consumer. Brent crude oil futures for October delivery fell 99 cents, or 1.3 percent, to $74.42 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for September settlement dropped 117 cents, or 1.6 percent, to $72.78 a barrel. Data released Saturday by the National Bureau of Statistics showed China’s official purchasing managers’ index fell to 50.4 in July from 50.9 in June, adding to concerns about a slowdown in the world’s second-largest economy. It was the slowest figure since the index slumped to 35.7 in February 2020. China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 50.3 last month from 51.3 in June, marking the lowest level in 15 months and prompting concerns about demand. Elsewhere, manufacturing activity rose in export powerhouses Japan and South Korea, though firms suffered from supply chain disruptions and raw material shortages that pushed up costs. The euro area manufacturing sector growth moderated in July but the pace of expansion remained elevated, final data from IHS Markit showed. The final factory Purchasing Managers’ Index fell to 62.8 from 63.4 in June. This was the lowest reading since March.

Oil prices slip 4 percent as supply grows – Oil prices tumbled about 4 percent on Monday as weak economic data from China and the United States, the world’s top oil consumers, and higher crude output from OPEC producers stoked fears of weakness in oil demand and oversupply. Brent crude oil futures slid by $2.65, or 3.5 percent, to $72.76 a barrel by noon. US West Texas Intermediate crude dropped fell $2.91, or 3.9 percent, to $71.04. “The complex is reacting pretty strongly from the more bearish economic data from China and the US,” said John Kilduff, partner at Again Capital in New York. China’s factory activity growth slipped sharply in July as demand contracted for the first time in more than a year, a survey showed on Monday. The weaker results in the private survey, mostly covering export-oriented and small manufacturers, broadly aligned with those in an official survey released on Saturday. “China has been leading economic recovery in Asia and if the pullback deepens, concerns will grow that the global outlook will see a significant decline,” said Edward Moya, senior analyst at OANDA. US manufacturing activity also showed signs of slowing. The pace of growth slowed for the second straight month as spending rotates back to services from goods and shortages of raw materials persist, according to data from the Institute for Supply Management (ISM). The ISM’s index of national factory activity fell to 59.5 last month, the lowest reading since January, from 60.6 in June. Also weighing on prices, a Reuters survey found that oil output from the Organization of the Petroleum Exporting Countries rose in July to its highest since April 2020. The United States will not lock down again to curb COVID-19, but “things are going to get worse” as the Delta variant fuels a surge in cases, mostly among the unvaccinated, President Joe Biden’s chief medical adviser, Anthony Fauci, said on Sunday.

Delta Variant Causes Oil Prices To Tumble -Oil tumbled by the most in two weeks as a fast-spreading delta variant posed a threat to demand and as economic data out of China signaled a slowdown. Futures in New York declined 3.6% on Monday. The virus is clouding the outlook for consumption as China faced a fresh outbreak and infections in Sydney matched a record. Amid the surge in cases, barrels from some key OPEC producers are hitting the market, also causing concern. Meanwhile, data indicated that China’s economic activity eased in July. The government in China has made steps to curb commodity inflation and those are having an impact, according to Rebecca Babin, senior energy trader at CIBC Private Wealth, US. “The next round of data from China on crude import numbers will be critical in figuring out how China is handling the most recent uptick in infections,” she said. Crude prices are off to a shaky start in August after July’s small gain with the resurgence of Covid-19 offsetting the global demand recovery. Saudi Arabia, Kuwait and the United Arab Emirates, three core OPEC oil exporters in the Middle East, boosted their crude shipments to multimonth highs in July, underscoring a return of the nations’ supply into an uncertain global market. Oil has “given back some of last week’s gains in response to weaker China data and continued worries about the spread of the delta variant,” Crude has settled into a range “with delta demand worries offsetting the current tight supply outlook.” : West Texas Intermediate crude for September delivery dropped $2.69 to settle at $71.26 a barrel in New York. Brent for October settlement fell $2.52 to end the session at $72.89 a barrel. Meanwhile, the U.S. and Israel vowed to respond to a deadly drone attack on a tanker last week in a major waterway for global oil shipments that they blamed on Iran. Middle East foes Iran and Israel have traded multiple accusations of shipping attacks in recent months. But Thursday’s strike off the coast of Oman, which Tehran denied carrying out, was the first to kill crew members — a Romanian and a Briton.

Oil Prices Extend Decline — Oil declined for a second day as the spread of Covid-19’s delta variant in China threatens to disrupt the recovery in global crude consumption. West Texas Intermediate futures ended Tuesday’s session down 1% at the lowest closing price in almost two weeks. Nearly half of China’s 32 provinces have been gripped by the latest outbreak in Asia’s largest oil market, with 5% of worldwde short-term oil demand potentially at risk, according to calculations by China National Petroleum Corp. The price drop was tempered somewhat by a rally in equities trading and the “potential hijack” of a ship in the Gulf of Oman. “China demand concerns because of the renewed restrictions from the viral spread were what caused the earlier weakness,” said Phil Flynn, senior market analyst at Price Futures Group. Crude rallied strongly in the first half of the year as the rollout of vaccines allowed major economies to reopen, boosting oil demand and draining the glut built up during initial waves of the pandemic. However, the fast-spreading delta variant has led to renewed restrictions in many countries. “Asia-Pacific is currently the focal point of lockdowns,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc. “There are 887 million people worldwide are currently in lockdown, which is more than at the beginning of 2021, and 85% of them are in Asia-Pacific.” Crude’s decline also put the U.S. benchmark under technical pressure. WTI fell below its 50-day moving average and is edging closer to its 100-day moving average. Such moves can often spark additional selling from trend-following funds. Prices: WTI for September delivery fell 70 cents to settle at $70.56 a barrel in New York. Brent for October settlement lost 48 cents to $72.41 a barrel. The U.S. benchmark’s nearest timespread weakened on Tuesday. While the spread is still in a bullish backwardation structure — with near-dated prices above those further out– it narrowed to the smallest in about a week.

Oil Settles Lower in Volatile Trade on Worries About Delta Variant – (Reuters) -Oil settled lower on Tuesday, as concern about rising cases of the Delta coronavirus variant outweighed expectations for another weekly draw in U.S. inventories that had boosted prices early. Brent crude oil futures settled down 48 cents, or 0.66% at $72.41 a barrel. U.S. West Texas Intermediate (WTI) crude settled down 70 cents, or 0.98% at $70.56 a barrel. Prices held lower in post-settlement trade after market sources said preliminary data suggested crude stocks drew in the United States. [API/S] Concerns over the spread of Delta variant in the United States and China, the top oil consumers, weighed on prices, with both benchmarks falling more than 3% at one point. In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control. “The news flow out of China has been bearish since the weekend,” said John Kilduff, a partner at Again Capital Management in New York. “There continues to be angst about the COVID-19 situation, which weighs on the petroleum complex the most.” Earlier, Brent and U.S. crude had risen more than 60 cents. Brent has risen more than 40% this year, helping earnings of oil firms. “We’re trying to price in how big the slowdown is going to be with the Delta variant,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. BP, ConocoPhillips , Diamondback Energy Inc and Continental Resources Inc all reported strong second-quarter earnings this week. Expectations of a return of Iranian crude to the markets also pressured prices. Iran and six powers have been in talks since April to revive a nuclear pact that could release its oil exports. But officials have said significant gaps remain. Iran’s new president, Ebrahim Raisi, said on Tuesday his government would take steps to lift “tyrannical” sanctions imposed by the United States on its energy and banking sectors. The sixth round of indirect talks between Tehran and Washington adjourned on June 20, two days after Raisi was elected president. Parties involved in the negotiations have yet to announce when the talks will resume. A Reuters poll showed U.S. crude and product inventories likely declined last week, with both distillates and gasoline stockpiles predicted to have fallen for a third straight week. The American Petroleum Institute, a trade group, suggested U.S. crude stocks fell by 879,000 barrels in the week ended July 30, market sources said. The data showed that U.S. distillate inventories, including diesel, fell by 717,000 barrels for the week ended July 30, and U.S. gasoline stockpiles dropped by 5.8 million barrels.

Incident with multiple tankers in Gulf of Oman raises concerns in oil market — U.S. officials say they are still trying to determine exactly what’s happening, but numerous reports say there’s potentially one hijacked ship in the Gulf of Oman and the status of several others is unclear. The situation occurred as tensions between the West and Iran have been rising, and as the U.S. and other world powers have been trying to reach a new deal with Iran over its nuclear program. At a briefing, U.S. State Department spokesman Ned Price said: “We are aware of the reports of a maritime incident in the Gulf of Oman. We are concerned. We are looking into it.” Price said this was part of a disturbing pattern of belligerent behavior from Iran “including belligerents in the maritime domain.”Price was referring to what military experts call a drone attack against a ship last week that killed a British crew member and a Romanian crew member aboard the ship Mercer Street.Other U.S. officials say the situation is moving quickly, but it appears armed Iranian gunmen had boarded the seized tanker.The incident has not moved oil prices, yet anyway. West Texas Intermediate crude futures for September settled down nearly 1% at $70.50 per barrel but they were off the lows of the day after the reports.Lloyds List reported that the Panamanian flagged Asphalt Princess was the ship that was reportedly seized by armed men. The British Navy earlier Tuesday had warned of a “potential hijack” in the Gulf of Oman, and the British military’s United Kingdom Maritime Trade Operations warned ship operators that “an incident is currently underway” off of Fujairah, United Arab Emirates, according to news reports.The Associated Press had reported that at least four ships off the coast of the UAE broadcast warnings Tuesday that they had lost the control of their steering. The four vessels were identified as Queen Ematha, the Golden Brilliant, Jag Poofa and Abyss, according to the AP, citing MarineTraffic.com.Helima Croft, a former CIA analyst who heads global commodities strategy for RBC, said the activity is alarming and it appears to have been some sort of action that involves the Islamic Revolutionary Guard. The IRGC is a powerful military force that Iran wields separately from the standard Iranian armed forces and it reports directly to the ayatollah. “It is alarming given the fact we had two fatalities on Friday,” she said. “You have to put it in the context of Iran continuing to make progress on the nuclear restart against the backdrop of a new hard-line government coming to power in Tehran. It raises the risk of unintended escalation, or one side not appreciating the other’s red lines.”

Harrowing Audio From Hijacked Tanker: “Iranians Are Onboard With Ammunition, We Are Drifting!” –Israel’s national public broadcaster Kan News has obtained audio from Tuesday to Wednesday’s harrowing events aboard the Panama-flagged tanker Asphalt Princess, believed to have briefly been under Iranian military control and headed for the Islamic Republic’s territorial waters in the Persian Gulf. In the short audio recording released Wednesday crew of the distressed Asphalt Princess vessel are heard communicating with the UAE Coast Guard, frantically saying that between five and six armed Iranians were on board during the ordeal. It also seems the captain communicates that the tanker is drifting and not under the crew’s control, confirming the initial reports that signaled something was wrong yesterday. The ship’s transponder showed it was “not under command”. The audio communication seems to have been made Wednesday just after the gunmen disembarked the ship. “Iranian people are onboard with ammunition,” the crew member communicates. “We are… now, drifting. We cannot tell you exact our ETA to (get to) Sohar.” But by later in the day Wednesday the hijackers departed the vessel, as ABC News reports: The hijackers who captured a vessel off the coast of the United Arab Emirates in the Gulf of Oman departed the targeted ship on Wednesday, the British navy reported, as recorded radio traffic appeared to reveal a crew member onboard saying Iranian gunmen had stormed the asphalt tanker. The incident – described by the British military’s United Kingdom Maritime Trade Operations the night before as a “potential hijack” – revived fears of an escalation in Mideast waters and ended with as much mystery as it began.

WTI Dips After Disappointingly Small Crude Inventory Draw – Oil prices fell for the second straight day, with WTI dropping back below $70 as the spread of COVID’s delta variant in China threatens to disrupt the recovery in global crude consumption.“China demand concerns because of the renewed restrictions from the viral spread were what caused the earlier weakness,” said Phil Flynn, senior market analyst at Price Futures Group.However, the prices bounced somewhat by the “potential hijack” of a ship in the Gulf of Oman. API

• Crude -879k (-3mm exp)
• Cushing +659K
• Gasoline -5.751mm
• Distillates -717K

Analysts expected yet another sizable crude draw in the last week but were disappointed when API reported a surprisingly small 879k drop in stocks (vs 3mm exp).

WTI Extends Losses Below $70 After Unexpected Crude Inventory Build –Oil prices are down again this morning as demand anxiety grew amid ‘Delta’-variant outbreaks in key consumer China,which countered improved sentiment in other risk assets. Additionally, for the second week in a row, the recovery in global air traffic has taken a step back, somewhat confirming the anxiety. After API reported a smaller than expected draw overnght “The risks to demand in China remain the number one topic. Some market observers are already reviewing their GDP forecasts for the third quarter. There is particular nervousness on the oil market because oil demand suffers considerably from mobility restrictions imposed in a bid to combat coronavirus.,” On the ‘bullish’ side of oil, tensions continue to rise in the Middle East, supporting prices. Iran’s newly elected hardline president, Ebrahim Raisi, took power on Tuesday, while hijackers briefly took control of an asphalt tanker in the Persian Gulf. Will the official data override algos’ worries? DOE

• Crude +3.627mm (-3mm exp) – biggest build since March
• Cushing -543k
• Gasoline -5.291mm (-1.6mm exp)
• Distillates +832k (-500k exp)

Analysts expected a 10th weekly draw in the last 11 last week (even after API’s much smaller than expected inventory drop), but they were wrong… very wrong. DOE reported a 3.627mm barrel build in crude stocks – the biggest since March.Distillates inventories also rose unexpectedly.

Oil Slumps As Covid Infections Dampen Demand Recovery— Oil slumped in New York after a surprise increase in U.S. crude inventories added to renewed concerns about demand recovery as China battles the coronavirus resurgence. West Texas Intermediate futures tumbled 3.4% to close at the lowest in more than two weeks. The delta variant of Covid-19 has been detected in almost half of China’s 32 provinces in two weeks, and at least 46 cities have advised residents against non-essential travel. Meanwhile, American crude supplies increased by 3.63 million barrels, the biggest gain since March, government data showed. Key timespreads for futures contracts tumbled in response to weakening supply-demand fundamentals. “The resurgence in Covid infections in China is dampening perceptions of demand recovery,”said Peter McNally, global head of industrials, materials and energy at Third Bridge. After eking out a small advance in July, August is proving to be tough for crude. Tightened controls in some Asian nations to curb the spread of the virus risk eroding oil demand at a time when the Organization of Petroleum Exporting Countries and its allies are gradually increasing supply. The gloomy demand outlook continued to weaken timespreads in the U.S. oil market on Wednesday though the benchmark is still holding a bullish backwardation structure in which near-dated prices are trading at a premium to those further out. October futures traded at 44 cents a barrel above the November contract Wednesday, compared with more than $1 a month ago. Prices: WTI for September delivery slipped $2.41 to settle at $68.15 on the New York Mercantile Exchange. Brent for October settlement dropped $2.03 to end session at $70.38 a barrel. U.S. gasoline inventories fell 5.29 million barrels to the lowest volume since November, while a gauge of fuel demand, total products supplied, was steady, the Energy Information Administration said.

Oil drops for third day on concerns over spread of Covid-19 variant – Oil prices fell for a third day in a row to a two-week low on Wednesday on a surprise build in U.S. crude stockpiles and as the spread of the coronavirus Delta variant outweighed the impact of Mideast geopolitical tensions.The U.S. Energy Information Administration (EIA) said crude stockpiles rose 3.6 million barrels during the week ended July 30.That compares with the 3.1-million barrel draw analysts forecast in a Reuters poll and the 0.9-million barrel decline the American Petroleum Institute (API) reported on Tuesday.Brent futures fell $2.03, or 2.8%, to settle at $70.38 per barrel, while U.S. West Texas Intermediate (WTI) crude settled $2.41, or 3.4%, lower at $68.15 per barrel.That puts both benchmarks on track for their lowest since July 20. For Brent, it puts the contract down for a third day in a row for the first time since late May.”Worries continue to grow over the spread of the Delta variant in China, which has weighed heavily on oil prices in recent days,” analysts at bank ING said.The United States and China, the world’s two biggest oil consumers, are grappling with rapidly spreading outbreaks of the highly contagious Delta variant that analysts anticipate will limit fuel demand at a time when it traditionally rises in both countries.In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control.Tensions in the Mideast Gulf, meanwhile, supported prices.On Tuesday, three maritime security sources claimed Iranian-backed forces seized an oil product tanker off the coast of the United Arab Emirates, though Iran denied the reports.This is the second attack on a tanker since Friday in the region, which includes the Strait of Hormuz. The United Kingdom and the United States are also blaming Iran for the earlier incident, in which drones crashed into the vessel and killed two sailors. Iran denies the reports.

Oil Up, but Surprise Build in U.S. Crude Supply Caps Gains – – Oil was up Thursday morning in Asia, with investors surprised by a build in U.S. crude oil supply, but still supported by ongoing tensions in the Middle East. Brent oil futures were up 0.24% to $70.565by 1:43 PM ET (5:43 AM GMT) and WTI futures gained 0.26% to $68.33. Both Brent and WTI futures fell by more than $2 a barrel on Wednesday. U.S. crude oil supply data from the U.S. Energy Information Administration on Wednesday showed a build of 3.636 million barrels in the week to Jul. 30. Forecasts prepared by Investing.com had predicted a 3.102-million-barrel draw, while a 4.089-million-barrel draw was recorded during the previous week. Crude oil supply data from the American Petroleum Institute released the day before showed a draw of 879,000 barrels. Some investors, though, focused on the bigger-than-forecast draw of 5.292 million barrels in gasoline inventories. “The fall in U.S. gasoline stockpiles to the lowest level since November 2020 suggests that fuel demand conditions in the U.S. are still quite resilient,”. Brent oil prices are now expected to rise to $85 a barrel by the fourth quarter as oil demand outpaces supply growth, the note added. The latest tensions in the Middle East gave the black liquid a boost, however. “With tensions brewing amongst Iran and world powers over last week’s drone attack, it seems nuclear deal talks will be lengthy and unlikely to provide imminent sanction relief for Iran,” OANDA senior analyst Edward Moya told Reuters. The U.S. State Department said on Wednesday that it believed Iran was behind the hijack of the Panama-flagged Asphalt Princess tanker in the Gulf of Oman that look place last week, but that this could not be confirmed. Iran, however, had denied responsibility. Elsewhere in the region, Israeli aircraft struck what the country’s military described as rocket launch sites in south Lebanon earlier in the day, as a response to earlier projectile fire towards Israel. Investors are also focused on the weather, with the risks of potential supply disruptions amid a forecast for more storms in the Atlantic also supporting prices, said Moya. The National Oceanic and Atmospheric Administration on Wednesday revised upward its outlook for the 2021 Atlantic hurricane season, with an estimated 65% chance of an above-normal season and between three to five major hurricanes.

Oil Up as Broad Market Rebound Offsets Delta Spread – Oil futures ended higher Thursday, snapping a three-day losing streak tied in part to worries that the spread of the delta variant of the coronavirus that causes COVID-19 may impact energy demand. West Texas Intermediate crude for September delivery gained 94 cents, or 1.4%, to finish at $69.09 a barrel on the New York Mercantile Exchange. October Brent crude , the global benchmark, rose 91 cents, or 1.3%, to close at $71.29 a barrel on ICE Futures Europe. WTI is nursing a week-to-date loss of more than 6%, while Brent is off 5.4%. The buy-the-dip approach remains a force in the oil market, analysts said. The bounce showed “crude oil bottom pickers stepping into the void today and pushing the barrel higher,” said Robert Yawger, executive director of energy futures at Mizuho Securities. “That auto reaction to crude-oil pullbacks had largely been working since the vaccine announcement on Nov. 2.” Recent weakness has been tied to concerns around surging cases of COVID-19 around the world tied to the delta variant, said Robbie Fraser, global research and analytics manager at Schneider Electric. “While demand levels have generally improved quicker than expected over the past year, record numbers of new cases in many countries threaten to halt or even unwind some of that progress in the weeks ahead,” he said, in a note. Crude slumped on Wednesday after an unexpected uptick in U.S. crude stockpiles, although gasoline inventories showed a much larger-than-expected drop. A stronger dollar also weighed on crude. The dollar backed off Thursday, with the ICE U.S. Dollar Index , a measure of the currency against a basket of six major rivals, off 0.1%. The build in U.S. crude stocks was largely attributed to a fall in exports. Natural-gas futures ended lower after the Energy Information Administration said a net 13 billion cubic feet of the fuel was injected into storage last week. The September contract fell 0.4% to cloe at $4.14 per million British thermal units. It remains up nearly 6% for the week, boosted by hot weather and strong global demand. September gasoline rose 2% to close at $2.294 a gallon, while September heating oil was finished 1.5% higher at $2.106 a gallon.

U.S. oil set for biggest weekly loss since October – -Oil prices fell about 1% lower on Friday, posting to their steepest weekly losses in months, on worries that travel restrictions to curb the spread of the Delta variant of COVID-19 will derail the global recovery in energy demand. Crude futures also came under pressure as the dollar strengthened after monthly U.S. job growth came in higher than expected. A stronger dollar makes greenback-denominated oil more expensive for buyers in other currencies. Brent crude oil futures settled down 59 cents, or 0.8%, at $70.70, while U.S. West Texas Intermediate (WTI) crude futures fell 81, or 1.2%, to settle at $68.28 a barrel. For the week, global benchmark Brent shed more than 6%, its largest week of losses in four months, and WTI tumbled nearly 7% in its biggest weekly decline in nine months. “The price action we see now is really a function of the macro picture,” said Howie Lee, an economist at Singapore bank OCBC. “The Delta variant is now really starting to hit home and you see risk aversion in many markets, not just oil.” U.S. President Joe Biden said that COVID-19 cases in the United States, which have climbed to a six-month high, will go up before they come down and that the new Delta variant is taking a needless toll on the country. Japan is poised to expand emergency restrictions to more regions of the country, while China, the world’s second-largest oil consumer, has imposed curbs in some cities and canceled flights. “Increased travel restrictions in China have come under the microscope of traders and could become a key oil price mover as this month proceeds,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois. U.S. oil rigs rose two to 387 this week, energy services firm Baker Hughes Co said. Growth in the rig count has slowed in recent months as drillers continue to focus on capital discipline.

Oil Has Worst Week in 9 Months as Dollar Hobbles Crude’s Rebound -Oil posted its worst weekly loss in nine months as a soaring dollar on Friday hobbled any attempt by crude prices to rebound on Mideast tensions, after a week of negative news on Covid. New York-traded U.S. West Texas Intermediate crude, the benchmark for U.S. oil, settled Friday’s trade down 81 cents, or 1.2%, at $68.28 per barrel. For the week, WTI lost 7.7%, its most since the 10% drop during the week to Oct. 23, 2020. London-traded Brent, the global benchmark for oil, was down 85 cents, or 1.2%, at $70.44 per barrel by 2:55 PM ET (18:55 GMT). Brent lost almost 8% for the week, also its biggest weekly decline in nine months. Oil and most other commodities tumbled as the dollar sprung back from a recent spate of selling as a resilient U.S. jobs report for July raised questions about the continuance of the stimulus provided by the Federal Reserve to markets and the economy. Since the COVID outbreak of March 2020, the Fed has been buying Treasuries and other assets to the monthly tune of $120 billion to support the U.S. recovery from the pandemic. “A stronger dollar will likely prove to be a big drag over crude prices in the short-term,” said Ed Moya, who heads research for the Americas at New York-based broker OANDA. Crude prices were down for the first three days of the week amid a global surge in coronavirus cases from the Delta variant that cast a pall over the outlook for oil demand. In the United States, the world’s biggest oil consumer, Covid cases hit a six-month high with more than 100,000 infections reported earlier this week, according to a Reuters tally. Crude prices did manage to catch a break on Thursday on Mideast tensions as Israeli jets struck purported rocket launch sites in Lebanon in response to an earlier attack, allegedly by Tehran. That was before the dollar’s rebound on Friday, which put paid to any further rebound in oil.

Oil Caps Worst Week in 10 Months | Rigzone – Oil fell, capping the biggest weekly loss since October, as the spread of the delta coronavirus variant in China and elsewhere in the world is casting doubts on demand growth. West Texas Intermediate futures dropped 1.2% Friday and 7.7% for the week. The dollar rose following a better-than-expected U.S. jobs report, weakening the appeal of commodities priced in the currency. China has imposed increasingly strict restrictions on mobility to fight the spread of the deadly variant, while records in daily cases were set in Thailand and Sydney, Australia. “The market is reacting to the concern that the delta variant, particularly in Asia, may erode mobility significantly,” says Bart Melek, head of global commodity strategy at TD Securities. “That implies that we could see significantly less tightness in pricing than we saw prior to this big virus concern.” After crude soared in the first half of the year on surging demand, the latest chapter in the pandemic has capped prices of not just oil but some other commodities as well. The premium for the nearest WTI contract over second-month futures, known as the promt spread, narrowed to 18 cents after reaching 72 cents a week ago, pointing to ongoing concerns about demand. “On the one hand, markets worry about economic implications of the spreading of the delta variant, but on the other, policy accommodation gives a strong backdrop.” WTI for September delivery dipped 81 cents to settle at $68.28 a barrel in New York. Brent for October fell 59 cents to end the session at $70.70 a barrel in London. Despite the weak outlook for demand from Asia, there are some improved metrics in the U.S., where roads have remained busy. Vehicle miles traveled on highways in the week to Aug. 1 match the similar week in 2019, before the pandemic hit, according to the Department of Transportation. Gasoline deliveries to the Spanish market jumped above pre-pandemic levels last month.

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